The naira, which rose to 180 against the dollar
shortly after the inauguration of President
Muhammadu Buhari about a month ago, has fallen to
222 at the parallel market due to a huge demand for
dollars by importers and investors.
Increasing business activities have made importers
and investors to move their foreign exchange demands
to the parallel market, putting pressure on the naira
at the segment, it was learnt on Tuesday.
The dollar was sold for between 220 and 222 on the
streets of Lagos, Abuja and Kano on Tuesday, while
the pounds and euro were sold for 350 and 249,
respectively.
Analysts and foreign exchange dealers said the future
of the naira looked bleak, at least at the parallel
market.
The Central Bank of Nigeria has been depleting the
external reserves in a bid to defend the local
currency.
At the interbank forex market, where the central bank
intervenes regularly to defend the currency, the naira
closed at 199 against the dollar on Tuesday, data
from the FMDQ OTC website showed.
The external reserves fell to $29.03bn on June 22,
from $29.8bn on May 18, data from the CBN website
showed.
Prior to the latest development, the foreign reserves
had been stable for several weeks.
Economic and financial analysts said the latest
movements in the external reserves meant that the
naira was beginning to come under some fresh
pressure.
Concerned about the depletion of the reserves, the
CBN met with bank officials on Friday to discuss how
to mitigate the pressure on the external reserves.
The CBN has yet to make the outcome of the meeting
official but sources said the central bank wanted the
banks’ cooperation in order to reduce the pressure on
the reserves.
The bank officials, it was learnt, told the CBN that it
needed to relax its rules in the forex market and
allow the naira to find its level.
The officials, however, promised to take the
deliberations at the meeting to the CBN Governor, Mr.
Godwin Emefiele.
It is unclear if the CBN will accede to the demand of
the banks to relax the rules in the forex market, but
the spokesperson for the central bank, Mr. Ibrahim
Mu’azu, could not be reached immediately for
comments. Calls made to his mobile telephone line
were not answered.
Last November, the CBN devalued the naira after
spending several billions of dollars to defend the local
currency.
The Acting National President, Association of Bureau
De Change Operators, Alhaji Aminu Gwadabe, told our
correspondent on Tuesday that the naira’s outlook at
the parallel market looked bleak, forecasting that the
currency might fall to 230 against the dollar in the
coming weeks if the central bank failed to deploy
measures to curb the increasing dollar demand at the
parallel market.
He said, “There is pressure on the naira again.
Maturing import bills are making the demand for
dollars to rise again. Most importers and investors are
saying they could not access dollar at the official
market.
“They are now turning to the parallel market, a
situation that is now fuelling the demand for dollar
and other foreign currencies at the parallel market.”
The Head, Research and Investment, Afrinvest West
Africa Limited, a research and investment advisory
firm, Mr. Ayodeji Ebo, said, “The CBN needs to do
something urgently otherwise it (slide in the value of
the naira) will continue.
“If the pressure continues, the CBN may devalue the
naira. I think the CBN is also waiting to see the plan
of the new government in order to align its monetary
policies with it. Once the new government comes up
with its plan, the CBN may devalue the naira. If that
is done, foreign investors who have been waiting on
the sidelines will come in.”

Source: http://www.punchng.com/business/business-economy/naira-faces-fresh-pressure-falls-to-222-per-dollar/

Change oo!!